SHRIMP INDUSTRY Tariff issue to have impact

U.S. shrimpers hope for higher fees against imports this week.
KNIGHT RIDDER NEWSPAPERS
WASHINGTON -- The future of the U.S. shrimp industry and the price Americans pay for shrimp could be affected by an upcoming decision by the Commerce Department on whether to charge tariffs on foreign shrimp.
The tariffs would be imposed if the department determines that foreign shrimp farmers dumped cheap exports on the U.S. market -- meaning sold for less than it costs to produce them -- in an effort to harm the domestic shrimp industry.
Ruling today
The Commerce Department will issue final determinations on tariffs for shrimp producers in China and Vietnam today, and for Thailand, India, Brazil and Ecuador in December. The tariffs would take effect in February. Not all shrimp-exporting countries would be affected.
It's widely expected that the tariffs will be imposed. The Commerce Department has found evidence of dumping in most of the cases it's investigated. Foreign exporters frequently complain about what they consider to be the department's bias in favor of domestic industries.
How much more shrimp would cost if the tariffs are imposed isn't clear.
Since the preliminary tariffs were announced in July, U.S. shrimp prices have increased slightly. Imports from countries that are expected to get tariffs have dropped in comparison with the same period last year, while imports from countries that weren't investigated have increased.
Imports were down
September shrimp imports were about 20 percent below what they were in the same month in 2003, according to National Marine Fisheries Service data, although shrimp importers were also affected by the string of hurricanes that battered the Southeast during the same period.
Wally Stevens, the president of the American Seafood Distributors Association, pointed to shrimp price increases following the announcement of the anti-dumping investigation in July and argued that consumers would be the first to suffer from the department's decision.
But many seafood industry analysts disagree. Some argue that nations saddled with hefty tariffs probably will bow out of the U.S. market, to be replaced by nations not targeted in the investigation, such as Indonesia and Mexico. Others suggest that grocery stores and restaurant chains most likely would absorb the rising prices.
The American shrimp industry asked the government for help in December.
"We didn't really have a choice," said Eddie Gordon, the president of the Southern Shrimp Alliance, an ad hoc American shrimpers' coalition. "We're talking billions of dollars that are going to be lost if the [American] shrimpers go out of business."
Change in status
Since the late 1990s, shrimp has gone from a pricey gourmet item to America's most popular seafood, thanks largely to cheap foreign imports. Prices have dropped by half since 2001. Shrimp sells for about $3.60 wholesale this month. It's become so inexpensive that even budget chains such as Dairy Queen and International House of Pancakes have it on their menus.
The principal factor driving shrimp's move to the culinary mainstream has been the rise of shrimp-farming operations in dozens of countries, mostly in Southeast Asia and Latin America.
American shrimpers almost all haul in their catch the old-fashioned way, piloting trawlers out into the Gulf of Mexico and the Atlantic Ocean and returning with nets full of wild shrimp.
In contrast, very little of the shrimp supplied by major exporters such as Thailand and China is wild-caught. Foreign producers rely on "farms" made up of large networks of pools in coastal areas, where shrimp are harvested in a manner more akin to soybeans than to seafood.
Shrimp consumption has increased more than 70 percent in the United States in the last decade, and the vast majority of shrimp that Americans eat is imported.
Overseas shrimp farms have caused mangrove deforestation and pollution. Some European nations have restricted imports of farm-raised shrimp because of worries over antibiotics use.
But shrimp is still popular in the United States, thanks to its low cost.
Domestic industry beaten
American seafood importers and other proponents of the foreign shrimp industry say the shrimp farms have outcompeted the fishing-based domestic industry.
American shrimpers "are competing against aquaculture," said Kenneth J. Pierce, a trade lawyer representing the Thai Frozen Foods Association and other defendants in the Commerce Department case. "It's the hunter vs. the farmer, and throughout history the farmer has always won that fight."
Domestic shrimpers argue that the foreign shrimp farmers aren't more efficient. Gordon's Southern Shrimp Alliance -- which represents shrimpers in Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina and Texas -- contends that foreign producers seek to crowd American shrimpers out of the market by selling below their production costs.
"So far, the Department of Commerce has upheld that dumping took place," Gordon said, referring to Commerce's preliminary findings in July. "We think what we're looking at here is the salvation of [the domestic] industry by targeting countries that have dumped shrimp into this country illegally."
How many jobs
The Southern Shrimp Alliance estimates that the domestic shrimping industry is responsible for 70,000 jobs in states on the Gulf Coast and the South Atlantic.
Ten U.S. lawmakers from Southeastern states signed a letter to the U.S. trade representative in January urging an investigation into the possibility of foreign shrimp dumping. In May, Louisiana Gov. Kathleen Blanco gave the Southern Shrimp Alliance $350,000 in state funds to fight the case. In October, the Louisiana Legislature passed a fee increase for shrimping and seafood retail licenses, intended for use in the Commerce case.
If the tariffs are imposed, some countries will be hit with considerably larger ones than others. Some of Vietnam's producers may see a 93 percent tariff, while Thailand probably will get a slap on the wrist in the single digits.
"The effect so far has just been an incredible amount of uncertainty," said Travis Larkin, a vice president of the Seafood Exchange, a Coconut Grove, Fla.-based seafood processor and importer. "I think the bottom line, though, is that free markets are resilient, and maybe a country not named in the dumping case will compensate for the lost supply. It's kind of like shaking up a big glass of water -- you get a lot of waves at first, but then it all settles out."
XNote: The signers of the letter to the Commerce Department urging action on behalf of U.S. shrimpers were: Reps. Solomon Ortiz, D-Texas; Billy Tauzin, R-La.; Gene Green, D-Texas; Max Sandlin, D-Texas; Ron Paul, D-Texas; Chris John, D-La.; David Vitter, R-La.; Walter Jones, R-N.C.; Gene Taylor, D- Miss.; and Ruben Hinojosa, D-Texas.